Retail Sales: Not Good News

The Big Picture reminds us of the Fables of Retail.

When December sales were announced, they were disappointing. "Do not worry!" we were told, for the holiday shopping season no longer ends on December 25th. Gift cards were to be the savior of retail, and all manner of data were trotted out to prove how they had been growing 25% year-over-year, were this many billions of dollars, were about to hit the malls and stores after New Year's Eve, you will see.

Alas, it was not to be. With December behind us, in January, we were told retail sales were bad because "It was too warm."

Why would Weather -- assuming it wasn't tornadoes or floods or locusts or slaying of the first born -- have prevented all those billions of dollars in gift cards from being redeemed? Memory fails to recall shoppers at Best Buy, Amazon, Circuit City, or Home Depot gift cards expressing issues with unseasonably nice weather as why they didn't exchange their gift cards for goods.

"If January was too warm for retailers, then surely the cold snap in February must have helped!" But it was no aid, as February sales fell below expectations, a disappointment, despite the respite from January's heat wave.

In the world of Retail, the Mad Hatter and the March Hare are at a never-ending tea party, concocting excuses and rationalizations, but refusing to admit whatever the Queen of Hearts can plainly see: a clear trend of slowing, disappointing sales.

In other words, the party is over, and we haven't yet seen the effects of the reduction in Mortgage-Equity-Withdrawal (MEW) resulting from the sub-prime fiasco which is beginning to emerge only now.

Despite that, the "conservatives" insist that the economy is just fine-and-dandy.

Maybe it is--in the Bahamas.